Challenges of Turn-Key Online
This is the tenth in my series of E-Myth Revisited posts. The E-Myth Revisited examines the core myth behind what people believe an Entrepreneur is and what it takes in reality to make a small business successful. This series of posts will cover the core topics explained in the E-Myth Revisited book and apply them to being a Wealthy Affiliate and making money online. Links to the complete list of posts in this series can be found at:
Challenges of Turn-Key Online
One of the most significant ideas in the E-Myth Revisited is the idea of the Turn-Key Revolution and the Business Format Franchise. However, does the concept of a business format franchise really apply online? To the extent that underlying principles of the business format franchise, which is the focus the E-Myth, applies to every business it certainly does. That is that the business is the product and the businesses owner's job is to figure out how to consistently produce the result the customer desires.
However, beyond this, the idea of duplicating a business online runs into some serious challenges. These challenges are relevant to us for a couple of reasons. First, they help us determine what areas we can copy from other people and what can't be copied. Second, they help us determine what areas of our business will be easier to off load to other people. Third, they help us to determine where the competitive advantages are. Those areas which are hardest to copy or off load to other people are the areas that we will most likely be able to find a competitive advantage.
With that in mind we're going to look at some of the main challenges involved with trying to create a business format franchise online, starting with the first one today.
World Wide Distribution
One of the main reasons why business format franchise's can work in the real world is because they require proximity to sell their products. This limits an individual business's customer base and allows individual franchises to be set up in locations all over the world.
However, this concept doesn't work online, because there is no location limitation. Any website can be accessed by anyone in the world that has access to the internet. There's no reason to make hundreds of duplicates of a site because the original can be accessed by everyone already.
There have been attempts to ignore this fact, and do something along the lines of a business format franchise anyone, but they typically don't work well. One example of this is resale rights, master resale rights, and private label rights. These products often include everything from an info product to a website and emails for a mailing list. However the end result of these products is generally nothing more than a price where the resellers rabidly drive down the price to next to nothing.
Affiliate programs get around this by selling the products themselves and just paying commissions to referrers. However, most affiliate programs have more in common with a trade name franchise than a business format franchise. They may offer some basic sales materials, but largely the affiliates are left to themselves to figure out how to sell their products.
Other companies with independent agents such as real estate agents or MLMs often just give the agents a page on their site to refer customers to. This is closer to the business format franchise format. However, this has the negative consequence of the agents not having a location of their own. This is usually compounded by the fact that technology advances so fast these offerings rarely manage to keep up.
Ultimately the world wide distribution nature of the internet makes at the very least the content nature of a website essentially impossible to duplicate. This includes things like advertising as well which is essentially distributed world wide as well. This still leaves all the back end functions of a site, but to the extent these things are reproducible they are generally automated with software.
Wealthy Affiliate represents about as close as you come to building a business format franchise model online. The training offers a standardized approach but is done in a general enough way that it can be customized to a variety of different niches. This still leaves a lot more flexibility than a business format franchise would, but that may be necessary on the internet.
Tomorrow I'll look at the opposite end of the spectrum and the rise of mass customization.